Thursday, October 7, 2010

A good informative article by John Ulzheimer - President of Consumer Education of Credit.com

Switzerland; the land of great skiing, hush hush banking, Roger Federer, and international neutrality. It’s that neutrality I’m going to imitate while writing this article. Why?

The subject of credit repair is a powder keg, lightening rod, PR loser…chose your own metaphor.

Opinions on the subject seem to be polarized, meaning you either like credit repair companies or you hate credit repair companies.

First off, what is a credit repair company?

According to the Credit Repair Organizations Act (CROA), the Federal law that defines how credit repair companies must do business, a credit repair company is actually referred to as a credit repair organization (or CRO) - and a CRO is anyone who “sells, provides, or performs any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of improving any consumer’s credit record, credit history, or credit rating.”

There are some exceptions to that rule.

If you’re non-profit and perform those duties then you’re not a CRO.

If you’re a bank or a credit union then you’re also not a CRO.

But if you are for profit, aren’t a bank, and sell services promising to help a consumer’s credit then you’re a CRO, whether you want to be one or not.

There are people who believe all credit repair is illegal.

That’s not true. “Credit repair is anything but illegal if you do it the right way,” says Edward Jamison, a lawyer and the founder of CreditCRM, a developer of credit repair business software.

And, the “right way” means you fully comply with the requirements of CROA and any state equivalent. How exactly do you comply with CROA? According to credit repair experts, CROA states that a CRO must do the following things, and others, in order to be in compliance:

1. Provide mandatory disclosures letting consumers know, among other things, that they can dispute credit information directly with the credit bureaus.

2. Avoid making any misleading or untrue statements about any consumer’s credit worthiness. You can’t say, “We guarantee we can remove your negative credit items.”